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Retailers and Financial Services Launching Their Own BNPL Service

Retailers and Financial Services Launching Their Own BNPL Service

Retailers and Financial Services Launching Their Own BNPL Service

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In recent years, several new trends have emerged in the payment industry. Increasing e-commerce purchases, rising digital payments, growing Fintech industry, and the newest being the traction towards buy now, pay later flexible payment option. It is the instant gratification of purchase along with interest-free financing that is driving the recent boom in the buy now, pay later space.

According to PayNXT360, the astronomical valuations and success stories of global BNPL players such as Afterpay and Klarna have also led retailers and financial services to foray into the buy now, pay later segment. Poised for big growth, several retailers such as Etsy, eBay, and Walmart have entered into a strategic agreement with BNPL players to provide their customers with flexible payment options. However, with the buy now, pay later options gaining round, retailers and financial service providers are also launching their own BNPL service.

Ikea’s new buy now, pay later installment payment option

In May 2021, the Swedish home-furnishing giant, announced the launch of a new buy now, pay later kind of flexible payment solution for customers in the United Kingdom. The flexible payment option is available for items worth £99 and £15,000.

Through the flexible payment option, customers can spread out their purchase cost over three to 48 months, based on the amount being borrowed. While the new service is very much similar to the buy now, pay later payment option, Ikea describes its new installment payment option as a traditional loan. The Swedish retailer has launched this service in partnership with Ikano Bank.

John Lewis makes online buy now, pay later move in the United Kingdom

In March 2021, John Lewis announced the launch of its buy now, pay later flexible payment option for customers in the United Kingdom. The departmental store entered into a strategic partnership with BNP Paribas for launching its own deferred payment services.

For now, the John Lewis BNPL option is an online-only service, wherein the customers will have to spend a minimum of £1,000 to enjoy the interest-free credit option. The departmental store has launched the deferred payment option to rival global BNPL players such as Klarna and Laybuy.

Shopify introduced buy now, pay later for customers and merchants

In May 2020, the e-commerce giant, Shopify launched its buy now, pay later services – Shop Pay. The payment option allows customers to split their purchases into four equal payments. The Shop Pay option provides buyers easy access to credit without paying any interest. It also comes at no additional fees.

Using the deferred payment options, customers can buy products from over one million merchants associated with Shopify. Through the launch of this BNPL payment option, Shopify is also helping its merchants to increase the basket size and conversion rates, when retailers around the world are struggling to cope up with the global pandemic.

Commonwealth Bank of Australia launched buy now, pay later service

Similar to retailers, financial services including major banks are launching the deferred payment option for their customers. For instance,

In March 2021, Commonwealth Bank of Australia unveiled its buy now, pay later service, which links to the bank account of customers. Expected to roll out in mid-2021, the BNPL payment option will be available for eligible customers. Being the leading digital bank in Australia, the buy now, pay later service of Commonwealth Bank will rival directly with BNPL giant Afterpay in the country.

BNPL as a mean to boost growth and valuation

With astronomical valuations of major buy now, pay later providers such as Klarna - valued at US$40 billion - retailers and financial services are looking at BNPL as a means to boost their growth and valuations. It is expected that more retailers and financial services companies including banks are either expected to enter into a strategic partnership with BNPL brands or will launch their own buy now, pay later services in the medium to long term.

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